The arenavirus envelope glycoprotein (GPC) retains a stable signal peptide (SSP) as an essential subunit in the mature complex. The 58-amino-acid residue SSP comprises two membrane-spanning hydrophobic regions separated by a short ectodomain loop that interacts with the G2 fusion subunit to promote pH-dependent membrane fusion. Small-molecule compounds that target this unique SSP-G2 interaction prevent arenavirus entry and infection. The interaction between SSP and G2 is sensitive to the phylogenetic distance between New World (Junín) and Old World (Lassa) arenaviruses. For example, heterotypic GPC complexes are unable to support virion entry. In this report, we demonstrate that the hybrid GPC complexes are properly assembled, proteolytically cleaved, and transported to the cell surface but are specifically defective in their membrane fusion activity. Chimeric SSP constructs reveal that this incompatibility is localized to the first transmembrane segment of SSP (TM1). Genetic changes in TM1 also affect sensitivity to small-molecule fusion inhibitors, generating resistance in some cases and inhibitor dependence in others. Our studies suggest that interactions of SSP TM1 with the transmembrane domain of G2 may be important for GPC-mediated membrane fusion and its inhibition.